India challenges booming Chinese drives market

01 June, 2004

While the Chinese drives market may be expanding at an annual rate of up to 40%, it faces a growing challenge from India, says a new study.

Last year, the Chinese AC and DC drives market was worth $463m, but it faces potential challenges, says the market analyst IMS Research. For example, a devaluation of the Yuan could slow the booming export market, while a crippled banking system, large amounts of public debt, and escalating property prices, are likely to slow public spending on large infrastructure projects.

At the same time, India is posing a increasing challenge, especially as the Indian Government has recently lifted the cap on foreign ownership of local firms to 75%, and has committed more funding to infrastructure projects. IMS forecasts that the Indian drives market will have an annual growth rate of 13.3% over the coming four years.

The growth of the Chinese drives market has been driven largely by the influx of investment by foreign drives-makers. Five of the 11 largest drives suppliers in the Asia-Pacific market are now from Europe or North America.